BUSINESS ORGANIZATIONS AND MANAGERIAL EFFICIENCY ON SMALL SCALE ENTERPRISES IN NIGERIA (A CASE STUDY OF SELECTED SMEs IN OWERRI)
1.1 Background of the study
A business organization is an individual or group of people that collaborate to achieve certain commercial goals. Some business organizations are formed to earn income for owners. Other business organizations, called nonprofits, are formed for public purposes. These businesses often raise money and utilize other resources to provide or support public programs.
Organization is a broader term, as it includes businesses and other groups of people not organized for commercial purposes. Clubs and sports teams are examples of non-business organizations. Organizations have a specific structure and hierarchy. People and systems create a culture within the organization and guide its operation. Different organizations have different policies, work flows and objectives.
Management is universal in the modern world. Every organization requires the making of decision, the coordination of activities, deciding in advance when, why how and who does what, setting of standards, measuring performance against standard and reviewing the standards. Numerous managerial activities have their own particular approach to specific types of problems which fall under headings such as production and operation management human resources management, management of health delivery system and others.
According to Nwachukwu (2007) management is the act of getting things done through and with others. Another definition by Launer (1999) he refers to management as the corner stone of organization effectiveness and is concerned with arrangements for the carrying out of organizational processes and the execution of work.
Kountz (2006) management is an operational process initially best dissected by analyzing the management functions. The five essential managerial functions are planning, organizing, staffing, directing, leading and controlling. These tasks of management are interrelated and actually dove tail into each other. Planning sets the stage by helping the organization to determine where it wants to go (objectives) and how to get there (strategies and tactics). These objectives and strategies determine the type of organizational structure most suitable for the organization.
Organization structures are designed to fit the strategies which are meant to achieve the objective and both strategies and objectives are the outcome of planning.
There is no human endeavor that does not require proper management for it to function efficiently. For every type of organization either government establishment or private enterprise, there is need for qualified managers to handle its activities. Management and organizations are seen as the product of their historical and social times and place and to understand the evolution of management theory in terms of how people wrestled with matters of relationship at a particular time in history. The lesson here is to learn from the trials and tribulation of those who have preceded us in steering the fortunes of formed organization.
It is now obvious to everyone that, of the factors that are necessary for economic take off, none is to be stressed more often than management characteristically, the developing countries are known for their low technological progress and extremely low labor productivity. A realistic approach to the development of these countries call for qualified high level manpower especially at the management level. In present day organizations it is the manager that determines the appropriate technology required and the best way to efficiently and effectively utilize all types of resources, be it physical or human.
The Nigeria scene portrays the situation very adequately. Despite her abundant natural resources and rich environment, the economy of Nigeria has not quite taken off most organization do not operate smoothly and efficiently. The management cadre which is a sine qua non for economic development is lacking. The government in many instances has assumed the function of entrepreneur and taken over the management functions, instances abound to convince everyone that the government has not fared well as a good manager, and has even performed worse than private entrepreneurs.
The need for management is essential to the development of organizations, be it small scale or large scale industries, therefore, whenever people work together, there is generally a need for the coordination of efforts in order to attain expected result in reasonable time, and with minimum amount of money, discomfort or energy. A manager is expected to be vast in knowledge and to possess special talents or abilities quite different from non-managers.
1.2 Statement of the problem
No organization, no matter its size can survive without an effective managerial function and good organization, therefore, there is need for sound and qualified man and women to operate in every organization especially small scale enterprises; and also there should be capable hands to manage the financial affairs in order to ensure a sound system of operation in the enterprise.
It is important to note that, effective operation is not exclusive concern of only one person or department within an organization, it must involve every staff who should have the interest of the organization at heart in order for it to achieve it set goal and objectives.
1.3 Objectives of the study
This project intends to assess the impact of efficient management function in the survival of small scale industrial towards the achievement of the overall goals and objectives of the organization.
Specifically this project has the following objective:
1. To find out the relationship between management business organization and managerial efficiency on small scale enterprises.
2. To examine some strategies for business organization and managerial efficiency set out by small scale enterprises.
3. To find the role of business organization and managerial efficiency on small scale enterprises.
1.4 Research questions
In order to achieve the stated objectives for the study the following research questions will be asked:
1. What relationship exists between business organization and management efficiency of small scale enterprises?
2. How does business organization and managerial efficiency impact small scale enterprises?
3. What role does business organization and managerial efficiency play on the growth of small scale enterprises?
1.5 Research hypotheses
Ho: There is no significant relationship between business organization and managerial efficiency on small scale enterprises.
Hi: There is significant relationship between business organization and managerial efficiency on small scale enterprises.
Ho: Business organization and managerial efficiency has no impact on small scale enterprises.
Hi: Business organization and managerial efficiency has no impact on small scale enterprises.
1.5 Significance of the study
The essence of this project cannot be over emphasized because it will help Small Medium Scale Entities understand how effective management is the yardstick and bedrock of every organization, thereby, enhances the achievement of organizational objectives. Furthermore, it will guide and give a sense of direction to the entire organization in the area of channeling resources and enhancing productivity and also giving status to the organization.
1.7 Scope of the study
This research work is on business organization and managerial efficiency on small scale enterprises of eatery centers (tantalizer) in Rivers state, using tantalizer as a case study. The study could not cover other eatery centers due to representative nature of tantalizer and proximity to the researcher.
1.8 Limitations of the study
The study was carried out to investigate the impact of business organization and managerial efficiency on small scale enterprises. The study is limited to eatery centres (tantalizer) in Rivers state, in Port Harcourt Local Government Area to be precise
1.9 Definition of terms
Business: This is a person's regular occupation, profession, or trade.
Organization: This is an organized group of people with a particular purpose, such as a business or government department.
Management: This is the process of dealing with or controlling things or people.
Efficiency: This is the state or quality of being efficient.
Small Scale Enterprise: This is a business that employs a small number of workers and does not have a high volume of sales. Such enterprises are generally privately owned and operated sole proprietorships, corporations or partnerships.
Business Organization: This is an individual or group of people that collaborate to achieve certain commercial goals. Some business organizations are formed to earn income for owners. Other business organizations, called nonprofits, are formed for public purposes.
Managerial Efficiency: This is the process of dealing with or controlling things or people in such a way as to achieve efficiency.
Rivers State: This is a state in southern Nigeria in the eastern part of the Niger Delta.
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REVIEW OF RELATED LITERATURE
Micro, Small and Medium Businesses (MSMEs) are generally regarded as the “backbone of the economy” (Kirby, 2003). One of the main issues that concern most of the policy makers at the helm of affairs is how to improve the economy through the support of small and medium scale enterprises in order to sustain their economic development. Therefore, a major concern to policy makers in different countries is to identify appropriate strategy to support and develop small and medium scale enterprises (SMEs). In order to tackle global challenges impeding sustainable development, world leaders came up with the Millennium Development Goals (MDGs) in 2000, were expected to be met by 2015. The first of these MDGs is “to eradicate extreme poverty and hunger”. Consequent upon this, it became very pertinent for the nations of the world to create strong socio-economic structure that would serve the interests of majority of their citizenry, especially the poor. Since then, different countries have been working to raise the living standard of their citizens in order to achieve this goal, among other Millennium Development Goals (Etuk, Etuk, &Baghebo, 2014). The importance of small and medium scale enterprises in a developing economy like Nigeria can be enormous because Nigeria‘s economy is dominated by small and medium scale enterprises in agricultural, construction, manufacturing, commerce and industry, services, trading, etc. Small and Medium Scale Enterprises (SMEs) play a significant role in both developed and developing economies. Statistics as shown that SMEs contribute over 55% of gross domestic product (GDP) and over 65% of total employment in developed economies and it also play a significant role by contributing 60% of GDP and over 70% of total employment in developing economies (Small and Medium Scale Enterprises Development Agency of Nigeria, 2012). Small and Medium Scale Enterprises are very vulnerable, and their failure rate is very high; so high that no nation can afford to ignore it. The Business Statistics Office (UK) observed that “60 per cent [of small business] fails in the first three years of existence. In the United States, the picture is much the same with “eighty percent of all start-ups succumb within their first five years”. Nigerian Economic Summit Group (2002) also emphasis that about 70 per cent of Small Enterprises in Nigeria failed within the first five years of operation. With this being the case, greater efforts are urgently needed to reduce the fatality rate of Small and Medium Scale Enterprises. Ultimately, a more robust SMEs sector will help to build a nation’s wealth, without it having to woo investments of sophisticated technology. Although, every nation including Nigeria has instituted assistance programs to aid its own SMEs, the entrepreneurs’ efforts count most in determining the performance of this industry. It is the careful selection and correct application of appropriate technique that determine entrepreneurial success. This study felt that strategic management, a key pillar for business survival, may be adapted and applied to ensure sustainable development of SMEs, on a more consistent basis. Strategic management literature focused primarily on large businesses. The reaction of SMEs is naturally one of being intimidated; and therefore they prefer to operate in the usual manner and mindset. Where there is no change, different results cannot be expected. Anthony Robbins, the most famous Neuron linguistic Programming specialist, once remarked: “To keep on doing the same thing and expect a different result is a form of insanity”. For reasons stated above, a research on strategic management for SMEs is very essential. Therefore, SMEs should not be discouraged to adopt strategic management if they have not done so. It can start off with its own style, and incorporate strategic management gradually. The study therefore seeksto assess the impact of internal and external Strategic Management variables on the performance of Small and Medium Scale Enterprises (SMEs) in order to enhance their sustainability in Nigeria..